NFL Audit   James Corne  Bob Edmiston  Geoff Kowalski    Jon Schultz
How does the NFL manage  its content portfolio?•  Goal: Quality Product to Maximum Audience     •  Saturation, Breakeven, ...
Where is the NFL?
Coverage Map
•  28/30 Most Watched Television Programs           •  $9.4 Billion Revenue         •  Time-Sensitive ContentWhy has this ...
Investment & Production Costs?        $          $    $               $
Risk!!!
Personal Conduct Policy
And the Winner Is…
Quality Control         $560M/           8yrs	     $400M	                 $207M/                WASH	  
How has it Worked?   •  Value Map & Sources     •  Silos & Exclusivity         •  Competition
Media Timeline                                                                                           1994	            ...
Value Map: How Fans get the NFL
Max Revenues: Silos & Exclusivity    Per	  Year:	  	        Per	  Year:	  	        Per	  Year:	  	   2006-­‐2013	  	      ...
Network Revenues                                                                                                   Thursda...
Will it Continue to Work?       •  Contract Length     •  Mobile vs. Wireless       •  Bring In-house?
Length, Channels & Revenue8	  7	  6	  5	                                                                                  ...
Max Revenues: Silos & Exclusivity    Per	  Year:	  	         Per	  Year:	  	            Per	  Year:	  	   2006-­‐2013	  	 ...
NFL Mobile1999          Text, Email, Web2005         Video
NFL Mobile   $15B by 2013   ($2.2B in Q1&Q2 ‘10)
NFL Mobile       = $720 M/4-yrs
Question…Mobile vs. Wireless      Internet TV?
Tablets    •  New Silo- Wireless       •  Exclusive?           •    AT&T?           •    Verizon?           •    Apple?   ...
Multiple System OperatorsRank	   MSO	                                                                 BasicVideoSubscriber...
Web Traffic RankingWebsite       Rank           (US Traffic)ESPN.com       22ndNFL.com       184thMLB.com       291stNBA.c...
Internet TV    •  GoogleTV?      •  “wait & see”      •  Winner?    •  In-house?      •  Decrease risk?      •  Cord-Cutti...
Internet TV changing the game?•  Revenue:	       –  Direct	  or	  Indirect	  from	  consumer?	  •  NFL	  as	  a	  Distribu...
Current TV Market Pie                         $8	  Billion	                                                 Subscriber	   ...
Breakeven Revenues for the NFLCurrent	  TV	            $	  4	  Billion	                Internet	  TV	                     ...
Key Numbers for Internet TV•  NFL	  games	  Reached…	  	      –  207,700,000	  unique	  viewers	  in	  2010	  in	  the	  U...
What would NFL charge to breakeven?           Viewership	   100%	                                                      90%...
NFL Internet TV Pie Potential  Lower	    Ticket	    Prices	                                                   Ad	  Rev.	  ...
What is stopping the NFL?•  Does	  this	  fit	  the	  goals	  of	  the	  NFL?	       –  Not	  currently	  since	  internet	...
QUESTIONS?  THANK	  YOU!	  
Back- up Slides Ahead
NFL	  vs.	  PrimeTme	  Viewership	  
Most	  Watched	  Shows	  for	  Fall	  TV	               Season	  
15	  Most	  Watched	  Basic	  Cable	  Shows	                    of	  2010	  
History	  s	  t the	  Product	  User	  Paths	  to	  NFL	  Where	  iof	  he	  NFL?	  
Map of Cable Coverage
The	  NFL	  is	  a	  Content	  Producer	                                $5M/year                     $7/month2.3Subs$3B/yr...
Key	  is	  in	  the	  Strategy	  and	  Contracts	  •  Strategy:	  Wait	  &	  See,	  Silo	  &	  Exclusivity	  	       –  Th...
Contract	  Lengths	  and	  End	  Dates	  •  TV	  Contracts:	       –  CBS,	  FOX,	  NBC,	  and	  ESPN	  expire	  in	  2013...
TV	  is	  STll	  Making	  Money	  Off	  the	  NFL	  •  Current	  Profit:	      –  CBS:	  $146	  million	      –  FOX:	  $107...
Bring	  Content	  DistribuTon	  In-­‐House	  •    US	  Pop:	  307	  million	  •    NFL	  Revenue:	  $9.4	  billion	  •    ...
Value Added Process        	           	           	        Fans	  
Emerging Sports on Cable
Established Cable              $5M/year
Investment Costs?
Production Costs?
How	  the	  NFL’s	  Brand	  Translates	  to	             Revenue	  for	  the	  League	                                    ...
Damage Control•  Corporate	  Partners	  •  Player	  Sponsors	  
Rank	   MSO	                                        BasicVideoSubscribers	       1	   Comcast	  CorporaTon	               ...
NFL	  as	  a	  Content	  Distributor 	  	  •  NFL	  distributes	  Thursday	  Night	  Games	  •  NFL	  Network	  and	  NFL	...
Move	  to	  Internet	  TV	  •    NFL	  Revenue:	  $9.4	  billion	  •    Revenue	  from	  Networks:	  approx.	  $3	  billio...
Internet TV changing the game?•  Revenue	  –	  Direct	  or	  Indirect	  from	  consumer?	  •  GlobalizaTon	  –	  channel	 ...
Breakeven Revenues for the NFL             Current	  TV	                                                  Internet	  TV	  ...
Key Numbers for Internet TV•  NFL	  games	  Reached…	  	      –  207,700,000	  unique	  viewers	  in	  2010	  in	  the	  U...
Current TV Market Pie                                $8	  Billion	                                                        ...
What would NFL charge?               Viewership	                  100%	                                         90%	      ...
Silo via ESPN3.com?                                                      AD	            Ad	  $$	                          ...
Current, Breakeven & Potential             $12	  Billion	               45%	  Subscribe	                                  ...
What is stopping the NFL?•  Does	  this	  fit	  the	  goals	  of	  the	  NFL?	       –  Not	  currently	  since	  internet	...
NFL (national football league) mobile device strategy
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NFL (national football league) mobile device strategy

  1. 1. NFL Audit James Corne Bob Edmiston Geoff Kowalski Jon Schultz
  2. 2. How does the NFL manage its content portfolio?•  Goal: Quality Product to Maximum Audience •  Saturation, Breakeven, Allocation •  Content NOT Distribution?
  3. 3. Where is the NFL?
  4. 4. Coverage Map
  5. 5. •  28/30 Most Watched Television Programs •  $9.4 Billion Revenue •  Time-Sensitive ContentWhy has this Worked?
  6. 6. Investment & Production Costs? $ $ $ $
  7. 7. Risk!!!
  8. 8. Personal Conduct Policy
  9. 9. And the Winner Is…
  10. 10. Quality Control $560M/ 8yrs   $400M   $207M/ WASH  
  11. 11. How has it Worked? •  Value Map & Sources •  Silos & Exclusivity •  Competition
  12. 12. Media Timeline 1994   1959   Fox  lagging  in  raGngs,   CBS  picks  up  NFL   buy  rights  to  NFL  for   1.8  B.       1939            1987   2006   ESPN  is  a  nobody,   NBC  is  first   NFL  Network  Created   picks  up  NFL  network  to  pick   up  the  NFL  
  13. 13. Value Map: How Fans get the NFL
  14. 14. Max Revenues: Silos & Exclusivity Per  Year:     Per  Year:     Per  Year:     2006-­‐2013     2011-­‐2014     2009-­‐2012     $622.5M   $1B   $180M   $650M   $1.1B   Bully Networks NOT Fans! $712.5M   $3.09B  
  15. 15. Network Revenues Thursday   Period AFC  Package NFC  Package Sunday  Night Monday  Night Total  Amount Night $420  million/1982–1986 NBC CBS None ABC   yr $473  million/1987–1989 NBC CBS ESPN  (2nd  half) ABC   yr TNT  (1st  half) $900  million/1990–1993 NBC CBS ABC   yr ESPN  (2nd  half) TNT  (1st  half) Fox  ($395  1994–1997 NBC ABC   $1.1  billion/yr million/yr) ESPN  (2nd  half) CBS  ($500   Fox  ($550   ESPN  ($600   ABC  ($550  1998–2005 ESPN $2.2  billion/yr million/yr) million/yr) million/yr) million/yr) NFL   CBS  ($622.5   Fox  ($712.5   NBC  ($650   ESPN  ($1.1   $3.085  2006–2013 Network   million/yr) million/yr) million/yr) billion/yr) billion/yr ($0/yr)
  16. 16. Will it Continue to Work? •  Contract Length •  Mobile vs. Wireless •  Bring In-house?
  17. 17. Length, Channels & Revenue8  7  6  5   Contract  Length  4   Number  of  Distributors  3   Revenue  (Billions)  2  1  0   82-­‐86   87-­‐89   90-­‐93   94-­‐97   98-­‐05   06-­‐13  
  18. 18. Max Revenues: Silos & Exclusivity Per  Year:     Per  Year:     Per  Year:     2006-­‐2013     2011-­‐2014     2009-­‐2012     $622.5M   $1B   $180M   $650M   $1.1B   ? ? 2 year $712.5M   Deals $3.09B  
  19. 19. NFL Mobile1999 Text, Email, Web2005 Video
  20. 20. NFL Mobile $15B by 2013 ($2.2B in Q1&Q2 ‘10)
  21. 21. NFL Mobile = $720 M/4-yrs
  22. 22. Question…Mobile vs. Wireless Internet TV?
  23. 23. Tablets •  New Silo- Wireless •  Exclusive? •  AT&T? •  Verizon? •  Apple? •  Samsung? •  Wait & See •  Emerging or Established? •  Develop or License? •  Contract •  Length vs. Value
  24. 24. Multiple System OperatorsRank   MSO   BasicVideoSubscribers   1   Comcast  CorporaTon   NBC   22,937,000   2   DirecTV   Silo-­‐ed   18,934,000   3   Dish  Network  CorporaTon   14,289,000   4   Time  Warner  Cable,  Inc.   12,551,000   5   Cox  CommunicaTons,  Inc.1   4,968,000   6   Charter  CommunicaTons,  Inc.   4,653,000   Silo-­‐ed   7   Verizon  CommunicaTons,  Inc.   3,290,000   8   Cablevision  Systems  CorporaTon   3,043,000   9   AT&T,  Inc.   2,739,000   Xbox  360?   Microso`  
  25. 25. Web Traffic RankingWebsite Rank (US Traffic)ESPN.com 22ndNFL.com 184thMLB.com 291stNBA.com 303rd
  26. 26. Internet TV •  GoogleTV? •  “wait & see” •  Winner? •  In-house? •  Decrease risk? •  Cord-Cutting? •  Length? •  Reversible?
  27. 27. Internet TV changing the game?•  Revenue:   –  Direct  or  Indirect  from  consumer?  •  NFL  as  a  Distributor:   –  Furthering  NFL  Network  and  NFL  RedZone  channels?  •  GlobalizaTon:   –  Channel  for  distribuTon?  •  Engagement:   –  How  important  is  fan  interacTon?  •  Mobility:   –  Greater  access  with  increasing  connecTvity?  •  Other?  
  28. 28. Current TV Market Pie $8  Billion   Subscriber   Ad  $$   $$   NBC   DirecTV   CBS   $4  Billion   Ad  $$   ESPN   FOX  Ad  $$   Ad  $$   $3.4  B  Ad  Revenue   $600  M  Subscriber  
  29. 29. Breakeven Revenues for the NFLCurrent  TV   $  4  Billion   Internet  TV   Ad  Revenue?   ESPN   1   Network   1   1.9   ESPN   1.9   DirecTV   1.1   DirecTV   1.1   New   Revenue  Networks  get  approx.  $2.2  Billion  from  adverGsing  
  30. 30. Key Numbers for Internet TV•  NFL  games  Reached…     –  207,700,000  unique  viewers  in  2010  in  the  U.S.  •  On  average…     –  17.9  million  viewers  per  game  
  31. 31. What would NFL charge to breakeven? Viewership   100%   90%   75%   60%   45%   10%  Keep   Season    $              9.15     $        10.16      $        12.20      $        15.25      $        20.33      $        91.48    ESPN   A  la  carte    $              0.42    $              0.47    $              0.56     $              0.70      $              0.94      $              4.23    No   Season    $        14.44      $        16.05      $        19.26      $        24.07      $        32.10      $    144.44    ESPN   A  la  carte    $              0.63    $              0.70    $              0.84     $              1.05      $              1.39      $              6.28     *  DirecTV  is  charging  $350!  
  32. 32. NFL Internet TV Pie Potential Lower   Ticket   Prices   Ad  Rev.  equal   Cover  $1.9  with   Cover  $1.9B     $11.5   to  Networks  + Subs.  +  Gain  Ad   $6.2  Billion   $4  Billion   lost    with  Ad   10%  Sequal  to   Rev   ubscribe   Billion   Rev.   at  $350   Networks   Increase   Intl    Exposure  
  33. 33. What is stopping the NFL?•  Does  this  fit  the  goals  of  the  NFL?   –  Not  currently  since  internet  connecTvity  is  only  at  77.3%   with  only  57%  having  high-­‐speed   –  While  99%  of  the  US  has  TV  access   –  However  internet  is  trending  up  •  Requires  the  NFL  to  become  a  distributor   –  Experience  with  NFL  Network  and  NFL  RedZone  •  NFL  would  have  to  interact  on  a  higher  level  with  fans  •  NFL  does  not  know  how  this  channel  will  develop   –  Goes  against  their  “Wait  &  See”  strategy  •  Is  this  decision  reversible?  
  34. 34. QUESTIONS? THANK  YOU!  
  35. 35. Back- up Slides Ahead
  36. 36. NFL  vs.  PrimeTme  Viewership  
  37. 37. Most  Watched  Shows  for  Fall  TV   Season  
  38. 38. 15  Most  Watched  Basic  Cable  Shows   of  2010  
  39. 39. History  s  t the  Product  User  Paths  to  NFL  Where  iof  he  NFL?  
  40. 40. Map of Cable Coverage
  41. 41. The  NFL  is  a  Content  Producer   $5M/year $7/month2.3Subs$3B/yr rv $5/subXbox IPTV Opportunity  Cost   CompeGGon  
  42. 42. Key  is  in  the  Strategy  and  Contracts  •  Strategy:  Wait  &  See,  Silo  &  Exclusivity     –  The  NFL  is  in  a  financial  posiTon  that  they  can  afford  to  wait  for   a  clear  winner(s)  to  emerge  before  signing  content  distribuTon   contracts   –  Puts  the  NFL  in  a  great  posiTon  to  take  advantage  of  new   technology  as  it  becomes  established  while  minimizing  their   risks  and  profiTng  greatly  •  Contracts:  Length  of  new  contracts  will  be  a  very  telling   signal  of  the  future  of  the  NFL  content   –  Long  contracts:  Signal  that  the  NFL  wants  to  milk  the  cash  from   this  established  distribuTon  because  it  is  established  and  not  at   risk  of  disappearing  or  being  disrupted  greatly   –  Short  contracts:  Signal  that  the  NFL  wants  to  potenTally  get  in   or  out  of  a  distribuTon  method   –  What    kill  switches    are  included  on  behalf  of  the  NFL?  
  43. 43. Contract  Lengths  and  End  Dates  •  TV  Contracts:   –  CBS,  FOX,  NBC,  and  ESPN  expire  in  2013   •  Started  2006   –  DirecTV  expires  in  2014   –  ESPN  rumored  to  be  close  to  a  deal  to  lock  up  MNF  past  2020  –   but  hasn’t  happened  yet   •  In  the  news  January  2011  •  Wireless:   –  Verizon  signed  a  4  year  deal  for  2010-­‐2014  •  Will  be  interesTng  to  see  who  gets  and  how  long  new   distribuTon  contracts  are  for?   –  Depending  on  how  other  distribuTon  channels  advance  and   how  quickly  they  become  mainstream  could  affect  the  new   deals  of  the  TV  networks,  if  they  even  get  new  contracts.  
  44. 44. TV  is  STll  Making  Money  Off  the  NFL  •  Current  Profit:   –  CBS:  $146  million   –  FOX:  $107  million   –  ESPN:  $83  million   –  NBC:  $12  million  •  However,  the  quesTon  is  will  this  last?   –  Analysts  suggest  that  it  will  and  that  these  profits  will   actually  grow  as  well  –  but  analysts  have  been  wrong   before  •  All  depends  on  companies  being  willing  to  spend   huge  $$$$$  on  adverTsements  
  45. 45. Bring  Content  DistribuTon  In-­‐House  •  US  Pop:  307  million  •  NFL  Revenue:  $9.4  billion  •  Revenue  from  Networks:  approx.  $4  billion  •  2010  regular  season  reached  207.7  million  unique   viewers  •  NFL  games  were  watched  by  an  average  of  17.9  million   viewers  •  $3  billion/207.7  million  =  $14.44  •  Leave  ESPN  the  most  profitable  contract  in  place  for   MNF  -­‐  $1.1  billion  per  year  •  $1.9  billion/  (207.7  million  –  17.9  million)  =  $10.01  
  46. 46. Value Added Process       Fans  
  47. 47. Emerging Sports on Cable
  48. 48. Established Cable $5M/year
  49. 49. Investment Costs?
  50. 50. Production Costs?
  51. 51. How  the  NFL’s  Brand  Translates  to   Revenue  for  the  League   Thursday   Period AFC  Package NFC  Package Sunday  Night Monday  Night Total  Amount Night $420  million/1982–1986 NBC CBS None ABC   yr $473  million/1987–1989 NBC CBS ESPN  (2nd  half) ABC   yr TNT  (1st  half) $900  million/1990–1993 NBC CBS ABC   yr ESPN  (2nd  half) TNT  (1st  half) Fox  ($395  1994–1997 NBC ABC   $1.1  billion/yr million/yr) ESPN  (2nd  half) CBS  ($500   Fox  ($550   ESPN  ($600   ABC  ($550  1998–2005 ESPN $2.2  billion/yr million/yr) million/yr) million/yr) million/yr) NFL   CBS  ($622.5   Fox  ($712.5   NBC  ($650   ESPN  ($1.1   $3.085  2006–2013 Network   million/yr) million/yr) million/yr) billion/yr) billion/yr ($0/yr)
  52. 52. Damage Control•  Corporate  Partners  •  Player  Sponsors  
  53. 53. Rank   MSO   BasicVideoSubscribers   1   Comcast  CorporaTon   22,937,000   2   DirecTV   18,934,000   3   Dish  Network  CorporaTon   14,289,000   4   Time  Warner  Cable,  Inc.   12,551,000   5   Cox  CommunicaTons,  Inc.1   4,968,000   6   Charter  CommunicaTons,  Inc.   4,653,000   7   Verizon  CommunicaTons,  Inc.   3,290,000   8   Cablevision  Systems  CorporaTon   3,043,000   9   AT&T,  Inc.   2,739,000  
  54. 54. NFL  as  a  Content  Distributor    •  NFL  distributes  Thursday  Night  Games  •  NFL  Network  and  NFL  RedZone   –  Sold  to  cable  companies   •  Comcast  pays  $5  million  a  year  to  have  these  channels   –  Many  cable  companies  have  not  picked  them  up   •  Represents  a  missed  opportunity  for  addiTonal  revenue   •  Does  not  compare  to  the  revenue  brought  in  by  networks   –  This  represents  a  risk  of  going  to  internet  TV  right  now   since  it  is  not  an  established  market  
  55. 55. Move  to  Internet  TV  •  NFL  Revenue:  $9.4  billion  •  Revenue  from  Networks:  approx.  $3  billion  •  Reached  207.7  million  unique  viewers  in  2010  •  Games  watched  by  an  average  of  17.9  million  viewers  •  $3  billion/207.7  million  =  $14.44  for  season  •  Leave  ESPN  the  most  profitable  contract  and  largest  online   presence  in  place  for  MNF  -­‐  $1.1  billion  per  year  •  $1.9  billion/  (207.7  million  –  17.9  million)  =  $10.01  for  season  •  DirecTV  charges  $350  for  NFL  Sunday  Ticket  •  256  regular  season  games  +  11  playoff  games  =  267  •  $3  billion  /  (267  games  x  17.9million)  =  $0.63  per  game  •  $1.9  billion  /  ((267  games  –  16  MNF  games)  x  17.9million)  =  $0.42  
  56. 56. Internet TV changing the game?•  Revenue  –  Direct  or  Indirect  from  consumer?  •  GlobalizaTon  –  channel  for  distribuTon?  •  Engagement  –  how  important  is  fan  interacTon?  •  Mobility  –  greater  access  with  increasing   connecTvity?  •  NFL  as  a  distributor  of  their  content?     –  NFL  Network  and  NFL  RedZone  channels  •  Other?  
  57. 57. Breakeven Revenues for the NFL Current  TV   Internet  TV   $  4  Billion   Network   ESPN   1   1.9   1.9   ESPN   1.1   New  NFL  Rev   1.1   DirecTV   1   DirecTV  Networks  and  ESPN  get  $3.4  Billion  from  adverGsing   DirecTV  gets  $600  Million  from  subscribers  
  58. 58. Key Numbers for Internet TV•  NFL  games  Reached…     –  207,700,000  unique  viewers  in  2010  in  the  U.S.  •  On  average…     –  17.9  million  viewers  per  game  
  59. 59. Current TV Market Pie $8  Billion   Subscriber   Ad  $$   $$   NBC   DirecTV   CBS   $4  Billion  Ad  $$   Ad  $$   ESPN   FOX   Ad  $$  
  60. 60. What would NFL charge? Viewership   100%   90%   75%   60%   45%  Keep   Season    $              9.15      $        10.16      $        12.20      $        15.25      $        20.33    ESPN   A  la  carte    $              0.42      $              0.47      $              0.56      $              0.70      $              0.94    No  ESPN   Season    $        14.44      $        16.05      $        19.26      $        24.07      $        32.10     A  la  carte    $              0.63      $              0.70      $              0.84      $              1.05      $              1.39     *  DirecTV  is  charging  $350!  
  61. 61. Silo via ESPN3.com? AD   Ad  $$   $$   $2Billion   ESPN  Ad  $$   Ad  $$   $6  Billion   Subs  &  Ad  Revenues   Ad  $$  
  62. 62. Current, Breakeven & Potential $12  Billion   45%  Subscribe   at  $175   $8  Billion  Lower  Ticket  Prices   $4  Billion   Increase   Intl    Exposure  
  63. 63. What is stopping the NFL?•  Does  this  fit  the  goals  of  the  NFL?   –  Not  currently  since  internet  connecTvity  is  only  at  77.3%   with  only  57%  having  high-­‐speed   –  While  99%  of  the  US  has  TV  access   –  However  internet  is  trending  up  •  Requires  the  NFL  to  become  a  distributor   –  Experience  with  NFL  Network  and  NFL  RedZone  •  NFL  would  have  to  interact  with  the  fan  on  a  higher   level  –  new  to  them  •  NFL  does  not  know  how  this  channel  will  develop   –  Goes  against  their  “Wait  &  See”  strategy  •  Is  this  decision  reversible?  
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